NCLT lacks jurisdiction over pre-CIRP tax attachments pending in High Court; IBC moratorium does not override sovereign recovery disputes.

APPLICANT’S SUBMISSIONS

1. M/s. Kobo Biotech Limited, formerly known as Avon Organics Limited, was admitted into CIRP on 13.08.2024 pursuant to a Section 7 application filed by JM Financial ARC Limited (JM Financial). Initially, Mr. Ravindra Chaturvedi was appointed as Interim Resolution Professional and later as Resolution Professional. Thereafter, by order dated 17.01.2025 in IA (IBC) No. 85/2025, the present Applicant was appointed as the RP.

2. The CD is the owner of land admeasuring 29.11 acres situated in Survey Nos. 18, 19, 20C, 21A and 21B at Yawapur Village, Sadashivpet Mandal, District Sangareddy, Telangana (“Subject Property”). Out of the said extent, 18.00 acres are mortgaged to JM Financial as the sole secured creditor, while 11.11 acres stand in the name of Avon Organics Limited (presently Kobo Biotech Limited) and are not mortgaged.

3. The CD had earlier availed tax deferment benefits under the APGST regime and had mortgaged its assets, including the Subject Property, as a condition for such deferment. Upon failure to repay deferred tax and regular tax dues for the period from Financial Year 2000 to 2013– 14, proceedings were initiated under the Revenue Recovery Act, 1864 and the Subject Property was attached vide Gazette Notification dated 21.02.2015.

4. Subsequently, Karur Vysya Bank Limited and Axis Bank assigned their respective debts along with underlying securities, including the properties to JM Financial in March 2016 by way of separate Assignment Deeds. By virtue of the said Assignment Deeds, JM Financial stepped into the shoes of the assignor banks and acquired all rights, title, interest and benefits in respect of the assigned debts and securities

5. Thereafter, JM Financial filed Writ Petition No. 29751 of 2018 before the Hon’ble High Court for the State of Telangana, to declare the Notice of Attachment and the Notice of Sale dated 23.07.2018 issued by Respondent No. 1 for recovery of tax arrears as illegal in respect of the secured assets over which security interest had been created in favour of JM Financial, and for setting aside the same. By order dated 24.08.2018, the Hon’ble High Court directed to maintain status quo.

6. Thereafter, in IA No. 1 of 2019 filed in the said Writ Petition, the Respondents sought permission to sell the plant and machinery. JM Financial raised no objection, subject to participation in fixing the reserve price and safeguarding of proceeds. By order dated 18.09.2019, the Hon’ble High Court permitted the sale with such safeguards and directed that, if JM Financial succeeded, the sale proceeds be remitted to it with interest at the highest applicable bank FD rate. Pursuant thereto, the plant and machinery situated on the Subject Property were sold for a consideration of Rs. 1,97,80,000/-, and the sale proceeds were deposited with Respondent No. 1.

7. After admission of CD into CIRP, the RP informed the Respondents regarding initiation of CIRP and the imposition of moratorium, and requested removal of the attachment over the Subject Property. Despite repeated communications, no steps were taken. On 31.12.2024, Respondent No. 1 addressed an email to the RP referring to certain issues concerning change of name of the CD and the use of the same PAN with separate GST registrations in Telangana (Avon) and Maharashtra (Kobo), and stated that clarification was being sought from the Commissioner of Commercial Taxes, Hyderabad.

8. Respondent No. 1 has filed a claim in the CIRP for Rs. 74,75,97,457/-  towards VAT and CST dues. The RP has provisionally admitted a cla